Markets lacklustre as China and Trump worries simmer away

In London, mining stocks like Rio Tinto and Anglo American are in the red as copper, platinum and palladium have sold-off. Royal Dutch Shell and BP are higher even though the oil price has handed back a small bit of yesterday’s gains.

CRH shares are in demand after the company announced solid first-half results. Group revenue and earnings both ticked up by 1%. The Americas was the best performer as earnings increased by 3%, and the European division saw 1% growth. Higher power and fuel costs in the Philippines caused the earnings to fall by 59% in Asia. The company anticipates full-year profit to be ahead of last years, but business in the Philippines is expected to be challenging. The stock has been range bound recently, but if it can hold above the 2,500p region, its outlook is likely to remain positive.

Ryanair shares are higher today after the airline confirmed it reached a deal with pilots based in Ireland. The strike by the pilots caused major disruption and distress to customers. The announcement, had prompted traders to snap up the stock. The airline’s reputation has taken a knock in the past year, and we could see cheap flights being offered to make amends, but the company could have done irreparable damage to its reputation. The share price has been in decline for one year, and a break below 1,300p could point to further losses. If the 1,500p mark is retaken it might pave the way for further gains.

TalkTalk shares were given a boost by Barclays who upgraded the stock to overweight from equal weight. The bank upped their price target from 130p to 150p.

US

Equities have had a muted session so far as ongoing concerns about trade, and Trumps future as President hang over the markets. Trade tensions between the US and China have slightly stepped up as today both countries imposed $16 billion worth of tariffs on each other’s imports. Delegates from both sides will continue trade negotiations today, but traders aren’t overly optimistic.

Traders are mindful of the optimistic assessment of the US economy by the Federal Reserve last night. It was suggested the US could be in for a rate hike next month. The Jackson Hole Symposium is continuing on today, and dealers will be listening out for remarks from central bankers.

Alibaba shares have jumped after the company posted first-quarter earnings per share of 3.30 yuan, which comfortably topped the 2.79 yuan that analysts were expecting. Revenue surged by 61% to 80.92 billion yuan, which was marginally ahead of forecasts.

The economic updates from the US were mixed. The jobless claims rate dipped to 210,000 – keep in mind the 40 year low was 207,000. The services PMI report cooled to 55.2 in August, down from 56 in July, and economists were expecting 55.9.

FX

EUR/USD has been hit by the firmer US dollar. The eurozone released respectable manufacturing and services reports, but it wasn’t enough to hold back the US dollar. France’s manufacturing and services sectors grew at a faster rate in August, and the readings topped forecasts. The German services PMI report showed improvement in August, while the manufacturing update showed a cooling in the growth rate. While the euro remains below the 1.1610 mark, its outlook is likely to remain negative.

GBP/USD has also been hit by the rebound in the greenback. The UK government is confident in achieving a good deal with the EU. There is still the possibility of a ‘no-deal Brexit’, and the government is publishing documents to explain what that scenario would look like. The aim is of the initiative is to keep the British public informed, but it also sends a message to Brussels that the UK is preparing itself for the possibility of leaving the EU without a deal.

Commodities

Gold has resumed its negative move now that the greenback has turned higher. The metal took advantage of the dollar weakness earlier this week, and yesterday it touched the $1,200 mark – which now appears to be acting as a barrier. The metal has been in decline since April, and if the negative move continues it could retest $1,160.

WTI and Brent crude are lower as traders booked their profits following yesterday’s surge. The American Petroleum Institute and Energy Information Administration report showed a major fall in stockpiles and those reports prompted a rally in the oil market, and today it has taken a breather.

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